India Inc seeks a quick fix stimulus to revive growth2 min read . Updated: 09 Aug 2019, 12:53 AM IST
- Industry associations meet finance minister, seek measures to boost the economy
- FICCI president says the industry is hopeful for another round of benchmark rate cut by RBI
NEW DELHI : Leading industry lobby groups on Thursday demanded a “quick fix" stimulus package from the government to kick-start consumption and investment cycles, joining a chorus of voices pressing for immediate steps to revive sagging economic growth.
“With current slowdown in global and domestic market, we need to have quick-fix solutions and observe the economy for few years for the effectiveness of the stimulus package," B.K. Goenka, president of Assocham said in a presentation to finance minister Nirmala Sitharaman.
To arrest the slowdown in the economy, Sitharaman has been meeting industry representatives across key sectors—banking, automobile, foreign portfolio investors (FPIs), micro, small and medium enterprises (MSMEs), industry associations and real estate—since the beginning of the week to hear out their challenges and promised to take necessary policy-based actions ‘fairly quickly’. Sitharaman met key industry associations on Thursday.
Goenka said that given the fiscal constraints, the government can raise resources by monetizing idle government land, which in turn can be used for affordable housing and new projects.
Earlier this year, India lost the fastest growing economy tag, falling behind China and grew at its slowest pace in five years at 5.8% during the three months ended 31 March.
On Wednesday, the central bank cut its growth projection to 6.9% from a forecast of 7% in June and said that boosting aggregate demand and private investment is the highest priority.
President of Federation of Indian Chambers of Commerce and Industry (Ficci) Sandip Somany said that the industry is hopeful that the Reserve Bank of India (RBI) will effect another round of interest rate cut this year. Besides, banks must be encouraged to pass on the benefit of rate cut to borrowers, he said.
RBI on Wednesday cut benchmark interest rates by 35 basis points to reach a nine-year low of 5.4% to improve business’ access to credit and help arrest a downturn in economic growth. This is the fourth time that the central bank cut benchmark rate in this calendar year. However, the industries have always said that the transmission of the rate cut by the banks is not quick enough.
“Weak and asymmetric monetary transmission process has constrained the economic recovery process by impeding the fall in lending rates which could stoke consumption demand," said T.V. Narendran, managing director of Tata Steel and vice president of Confederation of Indian Industry.
Chairman of Piramal Enterprises, Ajay Piramal, sought removal of penal provisions like imprisonment for unspent annual funds for corporate social responsibility (CSR). “There can be oversight on what the CSR money is spent on but there should not be any imprisonment," he said.
The Companies (Amendment) Bill 2019 proposed that any unspent annual funds CSR should be transferred to a specified government fund within six months of the financial year.
In the case of ongoing CSR projects, businesses have three years to utilise the funds allocated in a given year. The legislation has also proposed penal provisions that may include fine or imprisonment or both to defaulting officers.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.